Business Chapter 17

Four key ratios are liquidity ratios, leverage ratios, profitability ratios, and activity ratio Provides the firm with info about its financial position in key areas for comparison to other firms in its industry and its own past performance

Demonstrate the application of ratio analysis in reporting financial info

Accounting-recording, classifying, summarizing, and interpreting of financial events and transactions that affect an organization. The methods we use to record and summarize accounting data into reports are called an accounting system

Demonstrate the role that accounting and financial information play for a business and for its stakeholders

Balance sheet-Reports financial position of a firm on a particular day Income statement-Reports revenues, costs, and expenses for a specific period of time Statement of cash flows-difference between cash receipts and cash disbursements

Explain how the major financial statements differ

Managerial accounting-provides info and analyses to managers within the firm to assist them in decision making Financial accounting-provides info and analyses to external users of data such as creditors and lenders Auditor-review and evaluate the standards used to prepare a company's financial statements

Identify the different disciplines within the accounting profession

1) Analyzing documents 2) Recording info into journals 3) Posting that info into ledgers 4) Developing a trial balance 5) Preparing financial statements, balance sheet, income sheet 6) Analyzing financial statements Bookkeeping-Systematic recording of data Accounting-Classifying and reporting data to management Computers can record and analyze data and provide financial reports; help decision making process

List the 6 steps in the accounting cycle, distinguish between accounting and bookkeeping, and explain how computers are used in accounting